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manul Oct 13, 2006 11:35pm | Post# 1

Statistics on Top/Bottom Reversals ?
Is there any statistical data on the ratio of successful reversals for single, double, triple etc tops/bottoms for different pairs?
I heard the average ratio of success for single top/bottom reversal is about 35 %. I guess it is also time frame dependant.

EUR/AUD is approaching fortriple (I am not sure if there is such a word, but you know what I mean :-) bottom... possibly a big chance for a substantial reversal.

Akuma99 Oct 14, 2006 6:11am | Post# 2

Hi manul, there is a great book that focuses on this kind of thing by Thomas N. Bulkowski called Getting Started in Chart Patterns, which I have, another of his is the Encyclopedia of Chart Patterns, both of which go into very in-depth statistical analysis of all kinds of patterns. In terms of double and triple tops here is what it says, I hesitate to put more due to copyright ....

Appearance: Two well-defined peaks, separated in time but at nearly the same price level.
Reversal or consolidation: Short-term (up to 3 months) bearish reversal
Failure rate: 65%
Failure rate if waited for breakout: 17%
Average decline: 20%, with most likely decline between 10% and 15%
Average volume trend: Downward until breakout
Pullbacks: 69%
Percentage meeting predicted price target: 39%
Surprising findings: Tops closer together, deep troughs, and high volume
breakouts all show larger losses.

Appearance: Three distinct minor highs at about the same price level
Reversal or consolidation:
Short-term (up to 3 months) bearish reversal
Failure rate: 15%
Average decline: 21%, with most likely decline being 10 %
Volume trend: Downward
Pullbacks: 84%
Percentage meeting predicted price target:47%
Surprising finding:
A formation with a third top above the second one performs better, with an average loss of 22% versus 17%.

manul Oct 15, 2006 11:16pm | Post# 3

Thanks a lot, Akuma.
Will try to find this book.
Could you please explain the difference between pullback vs reversal and failure vs decline ?
Also not sure about the meaning of "predicted price target".

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